Sidoti & Company. September 2, 2015

Transcription

1 Sidoti & Company September 2, 2015

2 Patrick J. Hansen Senior Vice President & CFO 2

3 Disclosure for Presentation on September 2, 2015 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements may include expected future financial results, product offerings, global expansion, liquidity needs, financing ability, planned capital expenditures, management s or the Company s expectations and beliefs, and similar matters. The Company s business, operations and financial performance are subject to certain risks and uncertainties, which could result in material differences in actual results from the Company s current expectations. These risks and uncertainties include, but are not limited to, general economic conditions, in particular, relating to the automotive industry, customer demand for the Company s and its customer s products, competitive and technological developments, customer purchasing actions, foreign currency fluctuations and costs of operations. Such risks and uncertainties are discussed further in the Company s filings with the Securities and Exchange Commission. This presentation includes selected information regarding the Company s business, operations and financial performance and is qualified in its entirety by the more complete information contained in the Company s filings with the Securities and Exchange Commission and other public disclosures. All information in this presentation is as of September 2, 2015 and any distribution of this presentation after that date is not intended and will not be construed as updating or confirming such information. The company undertakes no obligation to update any information in this presentation to reflect subsequent events or circumstances. This presentation can be found at: Investor Relations Presentations 3

4 Fiscal Year 2015 and 2014 Results Fiscal Year Ended June 2015 Fiscal Year Ended June 2014 Net Sales Gross Profit $411,475 $348,419 $72,660 $65, % 18.9% Operating Expenses $41,534 $39, % 11.3% Net Income Diluted Earnings Per Share $20,654 $16,424 $5.66 $4.59 4

5 Year to Date Highlights Sales Increase Attributed to: Incremental Service Sales from General Motor = $34 million Launch of the New Kia Sedona Minivan = $23 million Lost Sales due to the temporary shutdown of Fiat Chrysler Windsor Assembly plant for the minivan = $18 million. Remaining $24 million Increase Related to North American Vehicle Production Growth and Product Growth in Latches, Driver Controls and Door Handle Components Gross Margin Reduction Due to: New Product Launch Costs, Higher Warranty Provisions ($8.5 million) and Premium Freight Costs Offset by Favorable Product Sales Mix and Foreign Currency Exchange Gains 5

6 STRATTEC S KEY FINANCIAL METRIC IS ECONOMIC VALUE ADDED (EVA ) FOR BOTH OUR SHAREHOLDERS AND OUR EMPLOYEES Fiscal 2015 Average Capital Employed $120,742 X 10% Cost of Capital $ 12,074 Net Operating Profit After Tax (NOPAT) $ 18,557 Less: Cost of Capital (12,074) FY 15 EVA $ 6,483 6

7 Outlook Going Forward Based on current customer orders we anticipate approximately $102 million in sales in our 1st quarter of fiscal year 2016 compared to $122 million in the prior year quarter. NOTE: Last year s first quarter had $28 million of incremental service sales with General Motors. Capital spending will be in the $15 million range during fiscal year 2016 compared to $26 million in fiscal year Increased capital spending in fiscal year 2015 was due to purchasing a Sales and Engineer Technical Center in Michigan and a third manufacturing facility in Juarez, Mexico. STRATTEC Defined Benefit Pension Plan was frozen effective December 31, Anticipate Plan contributions in fiscal 2016 of $3.0 million which is consistent with fiscal June 30 June Plan Benefit Obligation $99.3 $97.4 Plan Assets $105.5 $104.3 Over Funded Status $6.2 $6.9 The Company is in the process of implementing a full plan termination that could take months to complete. As of June 28, 2015, the Company had in excess of $26 million of cash or $7/share and anticipated funding the above requirements primarily from current operating cash flows. We have $40 million of credit facilities available with BMO Harris Bank with current borrowings outstanding of $10.0 million. 7

8 Frank J. Krejci (CRAY CHEE) President & CEO 8

9 History 1908 Briggs & Stratton Founded 1995 STRATTEC Spinoff 2000 VAST Alliance Formed 2001 VAST China Purchased 2007 ASDM Joint Venture Formed 2008 Power Access Purchased from Delphi 2011 STRATTEC Component Solutions Formed 2013 STRATTEC Advanced Logic (formerly NEXTLOCK) Acquisition 2015 MINDA VAST Joint Venture Formed 9

10 Briggs View of Itself: 1995 Engines Locks Swan Ugly Duckling 10

11 STRATTEC Profile Milwaukee, WI Employees (330, 000 sq. ft.) Headquarters, Engineering, Parts Manufacturing Juarez, Mexico - 2,890 Employees (325,000 sq. ft.) 3 Facilities Assembly, Key Finishing & Plastic Injection Molding El Paso, Texas - 30 Employees (90,000 sq. ft.) Distribution Troy, Michigan - 60 Employees (65,000 sq. ft.) Sales, Engineering, and Prototyping 11

12 Sales by Customer Other OEM Aftermarket and Industrial Customers 11% Other OEM Aftermarket and Industrial Customers 9% Tier 1 17% General Motors 26% Tier 1 19% General Motors 23% Hyundai/Kia 7% Ford Motor Company 11% Fiat Chrsyler 28% Hyundai/Kia 2% Ford Motor Company 13% Fiat Chrysler 34% Fiscal Year 2015 Net Sales = $411 million Fiscal Year 2014 Net Sales = $348 million 12

13 Sales by Products Miscellaneous Industrial 2% Door Handles & Trim Components 15% Miscellaneous Industrial 2% Door Handles & Trim Components 14% Power Access & Latches 22% Driver Controls 14% Key & Locksets 28% OEM Service & Aftermarket 19% Power Access & Latches 21% Driver Controls 16% Key & Locksets 33% OEM Service & Aftermarket 14% Fiscal Year 2015 Net Sales = $411 million Fiscal Year 2014 Net Sales = $348 million 13

14 Access Control Product Portfolio Keys & Locksets Mechanical keys Mechanical keys w/ electronic security enhancements Ignition locks Door locks Rear compartment locks Glove box locks Accessory locks Driver Controls Steering column mounted ignition lock housings Miscellaneous Industrial Zinc die-castings PRE-VAST VAST All the products in place PRE-VAST, plus Keys & Locksets Electro-mechanical entry keys w/remote entry electronics Bladeless electronic keys Electronic remote entry key fobs Codeable locks Biometric locks Driver Controls Instrument panel mounted ignition lock housings Instrument panel docking receivers for bladeless electronic keys Instrument panel Push to Start ignition switches for passive security systems Latches Rear compartment (tailgate, liftgate, trunk lid) Seat Back Power Access Power sliding side door systems Power liftgate Power trunk lid Power cinching latches & strikers Electronic control modules Door Handles & Functional Exterior Trim Inside and outside handles Outside handle chassis Rear license plate light bars with park assist cameras and/or concealed switches for releasing rear compartment latches Miscellaneous Industrial electronic vehicular access systems 14

15 Access Products Portfolio Locks & Keys Power Doors Handles Latches Steering Column Security Fobs Push Button Start Aftermarket Products 15

16 What s New Diversification Bridgewood Advisors searching for acquisitions and partnerships Security Products Motion Control Products Vertical Integration along with market diversification Aftermarket Strattec Component Solutions (contract manufacturing) Growth Initiatives Door Handles both in China and Mexico 3 rd Mexican Plant Expansion of Sales/Engineering Tech Center in Michigan Dealer Direct Cut Key Program with Hyundai/Kia Westinghouse Security License 16

17 Vehicle Access Systems Technology 17

18 VAST Partners - Velbert, Germany Founded 1899, Private - Grand Rapids, Michigan Founded 1975, Private - 33% Ownership by STRATTEC % Ownership by STRATTEC - 51% Ownership by STRATTEC - 80% Ownership by STRATTEC 18

19 Profile $1.5 billion + sales 16 Manufacturing sites 13 Engineering Centers Employment over 9,200 Fiscal year 2015 STRATTEC s share of VAST LLC Net Income $1,251,000 19

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22 VAST Customers Passenger Vehicle Manufacturers Commercial Vehicle Manufacturers System Suppliers 22

23 China 150,000 sq. ft. manufacturing facility in Taicang, China. Second facility in Fuzhou. 23

24 China In Millions Of US Dollars $130 Sales Growth $123.2 $110 $111.8 $90 $78.0 $76.3 $92.4 $70 $67.7 $50 $37.2 $37.5 $30 $10 $4.0 $10.1 $8.9 $14.6 $21.6 -$ Fiscal Year Ending June 24

25 VAST LLC Acquisition April 30, 2015 VAST LLC Acquired 50% interest in the former Minda-Valeo Security Systems for $12 million New Joint Venture renamed Minda-VAST Access Systems ( Minda-VAST ) Minda-VAST will provide a strategic global footprint for VAST to quote global customers in particular, General Motors, Fiat Chrysler, Ford and Volkswagen Minda-VAST operations in Pune and Delhi with sales in excess of $40 million Minda-VAST major customers are Nissan, Mahindra & Mahindra, and Tata Motors Minda-VAST products complement the existing VAST Group Product Portfolio 25

26 Diversification 26

27 Precision Zinc Die Casting Also: Plating Stamping Assembly 27 27

28 STRATTEC Advanced Logic (formerly NextLock) Biometric Security Residential & Hospitality Instant Prototype Kit Home Automation & Ultimately Automotive 28 Office & High Security

29 Accomplishments Record Sales and Profits for Fiscal Year 2015 Fully Funded Pension as of June 30, 2015 Added to Russell 2000 in July 2014 #1 Performing Stock in Wisconsin of Calendar Year 2014 Westinghouse Security- Exclusive brand name rights Ford Rotunda Supplier of the Year in 2014, Chrysler Supplier of the Year in Electronics 2013 and VAST Partners Supplier of Year for General Motors and Volkswagen in 2013 National Wellness Award from United Health Care 3 rd Year in a Row 29

30 Return to Shareholders STRATTEC VALUE CREATION Market Value at 1995 Spin Off: $68 Million -Stock Repurchases(Avg Price: $37.32): -Dividends: -Current Market Value ($65.00 share price): Total Return to Shareholders: $137 Million $17 Million $228 Million $382 Million Value Creation: $314 Million 7.5% Compounded rate of return over 20 years 30

31 STRATTEC Fiscal Year SALES EVA EPS 30-Jun $ Millions $000 Stock Price Low High 2010 $208 $1.04 ($4,929) $13 $ $261 $1.63 ($3,719) $20 $ $279 $2.64 $579 $19 $ $298 $2.72 $2,597 $20 $ $348 $4.59 $6,313 $35 $ $411 $5.66 $6,483 $59 $110 31

32 Summary International & Product Growth Strong Balance Sheet & Cash Flow Diversification Initiatives 32

33 Questions? 33

34 Sidoti & Company September 2, 2015

35 Exhibit A Company Profile Board of Directors Harold Stratton Relevant Experience Chairman and Former CEO Thomas Florsheim Weyco Group Acquisitions Michael Koss Koss Corporation Electronics David Zimmer Automotive Frank Krejci Current CEO 35

36 Exhibit A Executive Team Company Profile Age Years with STRATTEC Pat Hansen Senior Vice President and CFO Rolando Guillot VP Mexico Operations Brian Reetz Vice President Security Products Richard Messina 49 7 Vice President-Global Sales and Access Controls Products 36